Even paint manufacturers feel the chip shortage

2021-11-13 07:41:39 By : Ms. Nic Lee

3M, Corning, and PPG stated that sales were affected because of the reduction in the number of cars, washing machines and equipment produced by major customers;'something beyond our control'

3M, Corning, and PPG stated that sales were affected because of the reduction in the number of cars, washing machines and equipment produced by major customers;'something beyond our control'

The semiconductor shortage is affecting companies that do not directly rely on computer chips, cutting sales of glass, paint, and industrial sandpaper.

Large users of chips—including manufacturers of cars, smartphones, and home appliances—are also major buyers of other materials, such as paint and glass. Supplier company executives said that these companies are also reducing the purchase of many other components as finished product output declines due to chip shortages.

3M Co., Axalta Coating Systems Ltd. and Corning Inc. said this week that their sales have been affected by a shortage of semiconductors due to the reduction in cars, washing machines and equipment produced by their major customers.

Companies that provide services to manufacturers, such as water management company Ecolab Inc. and train operator Union Pacific Corp., have also been affected. Union Pacific said that shipments from auto and auto parts manufacturers fell by 18% in the third quarter.

3M, headquartered in St. Paul, Minnesota, manufactures grinding wheels for smoothing metals and films to brighten electronic displays. The company said that the shortage of chips has spread to its broad customer base, including customers that make cars and smartphones.

The company’s CEO Mike Roman said: “These are important markets for us. We are seeing a shortage of semiconductors.” The company said that part of the decline is being used by automakers to make more high-end chips using chips on hand. This is offset by cars, which are equipped with additional electronic devices and larger screens.

After consumers increase orders from hot tubs to all-terrain vehicles at a faster rate than manufacturers expected, semiconductors have become increasingly difficult to obtain. Chip manufacturing companies have focused on producing more profitable cutting-edge chips, rather than simple chips used in everyday products, and supply has been further restricted by factory fires in Japan and severe winters around Texas that caused temporary plant shutdowns. Manufacturers said that it usually takes years to increase the production capacity of a large number of new chips.

Starting from the end of last year, automakers began to cut production. According to data from the Federal Reserve, US manufacturers assembled 7.8 million vehicles in September, down from approximately 10.8 million in the same period last year. According to federal data, the output of household appliances also declined from June to August and from August to September.

Glass maker Corning said that due to fewer cars produced by customers, semiconductor shortages caused the company to lose $40 million in sales in the most recent quarter. The company said that the number of TV sales fell by about 10% year-on-year, which also cut revenue.

Corning Chief Financial Officer Tony Tripeny told analysts when talking about car production: "This production decline began to affect us in the middle of the third quarter, and we expect this situation to continue into the fourth quarter. ."

Some companies said the situation was worse than they expected. Automotive supplier Dana Inc. on Tuesday lowered its revenue forecast for this year by 100 million U.S. dollars to approximately 8.9 billion U.S. dollars, citing chip shortages.

Jonathan Collins, chief financial officer of the Ohio company, told analysts: "Supply chain conditions are expected to improve slightly, and the chip famine is expected to fade away. Unfortunately, none of this has been achieved."

Manufacturers say they can’t do anything to mitigate the impact of semiconductor shortages. Some people stated that they are focused on meeting real needs, finding new customers for the product and performing maintenance that has been delayed in recent periods of high demand.

Ecolab, which helps manufacturers manage water use, runs auto paint booths and produces cleaning products, said it also felt declining demand.

"The chip shortage that occurred there has nothing to do with our own operations, but it is reducing demand," said CEO Christoph Baker. "This is obviously beyond our control."

PPG Industries, which produces paints and coatings, said earlier this month that the lack of semiconductors is beyond the scope of its automotive customers, which also affects the production of heavy construction equipment and electrical appliances. The Pittsburgh-based company said it expects to return to normal in the second half of next year.

CEO Michael McGary said: "In these things, such as appliances, there are more chips than people realize."

U.S. Steel said on Friday that some of its automotive customers plan to increase productivity in the next six months, starting in November at the earliest.

"We are very happy to hear the voices of multiple automotive customers who herald the trough of chip shortages may have passed," said CEO David Burritt.

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